Appraisals, Home Inspections and the Important Role of Home Inspectors

In June 2016, I had the opportunity to ask some specific questions of Cheryl Walker, Director, Office of Single Family Housing(OSFH), Home Valuation Policy Division, US Department of Housing and Urban Development (HUD), Washington, DC. Director Walker is ASHI’s direct point of contact at HUD for the concerns of home inspectors. The following is a summary of our greetings and conversation. – Carol Dikelsky 

ASHI Reporter: Director Walker, ASHI would like to congratulate the HUD’s Office of Single Family Housing for its update of the Single Family Housing Policy Handbook, released in 2015. This is a great accomplishment, the result of tremendous effort by you and your team.

We appreciate the fine working relationship that ASHI has had with your office in this effort. The Handbook contains multiple references that highlight the importance of home inspection.

Furthermore, ASHI would like to thank you for the update and reissue of Form HUD-92564-CN, “For Your Protection: Get a Home Inspection” http://portal.hud.gov/hudportal/documents/huddoc?id=92564-cn.pdf, and in particular, the following statement in the Handbook: “Mortgagees are required to provide form HUD-92564-CN, For Your Protection: Get a Home Inspection, to prospective homebuyers at first contact, be it for prequalification, preapproval or initial application.”

ASHI has heard anecdotally that some home sales professionals suggest that the new requirements for appraisers to make observations on the technical elements of a home might signal a blurring of the distinction by HUD OSFH between appraisals and home inspections—even that appraisals might replicate or displace home inspections. 

Could you comment on HUD OSFH’s intent on this point and clarify its views on the roles of appraisals and home inspections as outlined in the Handbook? Was the Handbook drafted with any intent to diminish the need for a home inspection or change the historic relationship between appraisals and home inspections?

Director Walker: Thank you for the opportunity to speak directly about this issue to the members of ASHI and readers of the ASHI Reporter.

We strongly encourage homebuyers to get an independent assessment of the property they intend to purchase and to have it done by a qualified home inspector who will fully check the property’s condition.

HUD does not intend for FHA appraisals to diminish the need for home inspections or change the purpose for which appraisals and home inspections are intended. We view home inspectors as a valuable resource to prospective buyers in the home-buying process. The appraiser is an integral party in the assessment of property value.

ASHI Reporter: In response to these concerns, ASHI has cited the Handbook passage that states, “An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector.” Could you elaborate on this point to address any confusion that might exist in the home sales professions? 

Director Walker: The important thing is that we do require appraisers to report readily observable conditions, specifically as they relate to the health, safety and soundness of the property. So if the property has obvious deficiencies in areas of health and safety, appraisers must mention and describe those issues in the appraisal report.

Appraisers’ input and assessment is essential to determine the value of the property. We do not expect appraisers to make determinations or statements about anything they are not qualified to assess. 

ASHI Reporter: Because the decision to obtain a home inspection is always voluntary and because typically a home inspection is not performed unless a homebuyer requests it, this increases the importance of education and awareness. In the Policy Handbook, HUD OSFH clearly restates the law that states that mortgagees are required to provide Form HUD-92564-CN, “For Your Protection: Get a Home Inspection,” to prospective homebuyers at first contact, be it for prequalification, preapproval or initial application. Are there other steps that HUD OSFH might take to enhance awareness and education regarding voluntary home inspections?

Director Walker: We strive to provide information to all stakeholders involved in the home-buying process about the value of getting a home inspection. 

HUD provides training to lenders, housing counseling agencies and real estate agents who work with first-time homebuyers. This training is offered in face-to-face settings and prerecorded webinars that include reminders about the importance of getting a home inspection.

ASHI Reporter: Looking toward the future, do you see emerging issues pertaining to health and safety in homes—such as asthma, radon, fall hazards and more—expanding HUD OSFH’s role for and linkage to home inspection as being part of the solution? How can ASHI and home inspectors help and participate in these efforts?

Director Walker: We are always researching home health and safety issues. HUD’s Office of Lead Hazard Control and Healthy Homes helps ensure that home and safety issues remain in the forefront.

ASHI members can and do help, albeit indirectly, through the continued good working relationship that ASHI and HUD share. We meet at least twice a year to exchange information with each other and maintain our mutual awareness of the emerging issues in home health safety.

Once again, thank you to ASHI for giving HUD the opportunity to have input into this discussion and reach out to the members of ASHI. We hope to continue to receive information on behalf of home inspectors across the country and work out ways to enhance the home-buying experience for all.

ASHI Reporter: Thank you, Director Walker!